Exploring new areas

Mumbai, Oct. 14: UTI Bank will float an asset management company to manage funds under Securities and Exchange Board of India?s venture capital guidelines. It has also decided to launch credit cards.

Both plans were among the key decisions taken at the board meeting of the bank held here today. They came against the backdrop of a 136 per cent rise in second-quarter net profit at Rs 109.01 crore compared with Rs 46.22 crore in the same period of the previous year.

The venture fund plan was low on details. ?We believe there is an opportunity there,? is all that Hemant Kaul, president of UTI Bank, told reporters. He refused to elaborate, saying the nitty-gritty would be worked out only after clearances from regulators come in.

According to the information given to exchanges, the bank will set up two subsidiaries, which will function as public limited companies. One will oversee sales and service, while the other will be an asset management company working under venture capital norms.

High scores

The 136 per cent leap in second-quarter profit was possible because it was calculated on a lower base in July-September 2004, when transfers of government bonds to held-to-maturity category crimped UTI Bank?s earnings.

Kaul said in 21 of the 23 preceding quarters, the bank has shown a net profit growth of 30 per cent. Even if the low-base effect is ignored, quarterly profits in the current year have been in line with the pace of previous increases.

The earnings surge was fuelled by a healthy growth in net interest income, which jumped around to Rs 255.45 crore in July-September this year from Rs 180.72 crore same time last year. Net interest margin went up to 2.80 per cent from 2.66 per cent in the first quarter, though it was lower than the 3.12 per cent in the second quarter last year.

On the retail front, advances rose to Rs 5123 crore for the period ended September 30. This marked a growth of 90 per cent over Rs 2698 crore last year. These loans now constitute 28 per cent of the bank?s total advances.

Net non performing assets (NPAs), as a proportion of net customer assets, fell to 1.03 per cent in the first half from 1.33 per cent in the same period last year. Gross NPAs declined to 1.72 per cent from 2.53 per cent last year.

Board berths

The board has approved the appointment of S. B. Mathur, as the nominee of the administrator of the specified undertaking of the Unit Trust of India (UTI- I). M. V. Subbiah and Ramesh Ramanathan were named as independent directors of the bank.